Average age of first-time homebuyer now at 40

Article content

There’s a shift happening and people aren’t so house-obsessed anymore

The average age of first-time homebuyers in Ontario last year was 40, up from 38 six years ago, and 34 a decade earlier, according to Teranet, the province’s land registry office.

Recommended Videos

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Average age of first-time homebuyer now at 40 Back to video

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Play Video

“Everything in general is just more expensive, and people are delaying their home-buying plans,” said Victor Tran, a mortgage and real estate expert with RATESDOTCA.

Tran, also a mortgage broker and real estate agent, says the rising age of first-time buyers has been apparent for years. He has clients who have been saving money for upwards of two decades to afford down payments that are increasingly out of reach.

“So they rely on parental assistance,” Tran continued. “Their parents are aging, in their late 60s or early 70s, retired and planning for nursing homes or long-term care homes of some sort.”

Indeed, the wealth transfer is in full swing, with early inheritances becoming commonplace, but receiving it by 40 might not be soon enough. Buying a home at that age with a 30-year amortization to lower monthly mortgage payments ultimately means the homeowner pays more interest than principal, and that could eat into their retirement years.

Granted, they could also downsize during the intervening period, so there are options, says Tran. However, it brings up an interesting question, he added.

“’A lot of people ask, ‘Should I keep renting into my 40s, or should I dump the majority of money I’ve been saving up for the past 15, 20 years into this home?’ There’s a good amount of people I’ve been talking to that don’t want to bother at all and are okay with just renting for the rest of their lives because it gives them more flexibility,” Tran said.

It’s instructive to note that 40 is the average age of first-time homebuyers in Ontario, says Ron Butler, owner of Butler Mortgage, meaning that some of them could be as old as 45 or 50.

Butler says buying a home at a later age makes sense if the buyer has received a large inheritance, otherwise it’s a toss-up.

“The really interesting thing is the elimination of first-time buyers under the age of 30 — they’re unable to event attempt to buy a home,” Butler said. “They’re absent. They don’t exist, at least not in Ontario.

“When I started in the business 30 years ago, they were extremely common.”

When Butler’s career began around three decades ago, a 27-year-old could easily become a homeowner, especially with mortgage insurance courtesy of the Canada Mortgage and Housing Corporation. Today, that 45-year-old buyer needs CMHC insurance while the 27-year-old is likely still living with their parents, never mind even able to afford rent in the province’s largest cities.

With nary an indication that home prices will come back down to earth, Tran anticipates Canadians will trade in their preoccupation with homeownership for what he calls “the European mentality.”

“People I’ve talked to are okay with renting and not being tied to a house, so there’s a shift happening — at least in the networks I’m involved with — and people aren’t so house-obsessed anymore,” Tran said. “Rather, they can focus on building their relationships and families, raise their children and, most importantly, save for retirement instead of just being house-rich but cash-poor.